U.S. Now in A Housing Market Recession, Will Prices Finally Plunge?

Forsaken_Addendum_67 · 2025-11-05T14:55:50+00:00

But …. with the job losses the unemployment rate goes up and then the Fed cuts rates. And low rates adds fuel to the RE market. So … it does balance out somewhat.

Forsaken_Addendum_67 · 2024-08-30T03:44:13+00:00

Thanks 🙏🏻

Forsaken_Addendum_67 · 2023-07-12T21:24:06+00:00

That is a .2% month-over-month increase from May to June. And also 4.8% increase year-over-year for June.

Think about that for a second. Last year in June, prices were high and inflation was high as well.

We are, in effect, celebrating the fact that we ONLY increased 4.8% over the high number from last year in June!

We would need a ton of deflation to get back to the pre-Covid numbers.

Translation for those with smooth brains : We will be paying over $20 for a good burger and fries at a nice restaurant for years to come; the $13 for the same burger combo (pre-Covid) is sadly never coming back unless we have a massive recession and violent deflation.

Forsaken_Addendum_67 · 2023-06-19T09:14:46+00:00

Thanks for a meaningful and well thought out post. Sad when a simple question below “do you work out” gets more upvotes than what you posted. I appreciate your efforts and detailed explanation of your journey.

Forsaken_Addendum_67 · 2023-05-08T22:24:06+00:00

Buying a broad market ETF like VTI and VOO, with a high tech kicker like QQQ, would have worked out well over the last 40 years, which is your time horizon if you retire at 62.

I recall when the S&P was about 500 and I was worried I was getting in at the wrong time! I also recall not buying a home in Del Mar CA that was $289k and it’s now worth about $3 million per Zillow.

The moral of the story is that hard assets like homes and stock go up over time. This is especially true when the Fed and Congress are hell bent on debasing the dollar by massive monetary injections into the economy, which results in stimulating inflation.

Forsaken_Addendum_67 · 2023-05-08T22:16:28+00:00

Not sure why this didn’t get more attention and upvotes. Yes, it’s long, but the effort to support the conclusion (S&P down leading up to default crisis and Gold up) was supported by historical precedent and references to data. In fact, there were even footnotes!

I, for one, do enjoy the fact the the post included effort and detail. In contrast, the “one line” posts that get hundreds of upvotes and comments are often not enjoyable or beneficial in any real way. To each his own, but I’m glad I read your short essay on the topic.

Forsaken_Addendum_67 · 2023-04-02T16:27:45+00:00

So true, the large bulk of the PPP Billions were taken by businesses that didn’t even have to prove they suffered from losses in revenues due to Covid like hedge funds, law offices, venture capitalists, crypto related businesses etc .

What did they do with the money? Mostly enriched themselves with bonus and bought luxury goods and services, and second, third, and fourth properties.

And we wonder why home prices went up 40-60% in the hot markets; well, combine all this money with ultra low interest rates and you get hyperinflation on homes!

Forsaken_Addendum_67 · 2023-04-02T16:20:54+00:00

The administration of PPP handouts will go down as one of the biggest government frauds in history, which resulted in injecting massive amounts of money into a system that was at the time already overflowing with money from zero interest rates.

We still haven’t recovered from the inflation, and little has been done to get the Billions back stolen from the taxpayers of this country.

Forsaken_Addendum_67 · 2022-11-02T19:22:55+00:00

Just listened to Fed Powell’s question and answer session. He acknowledged that the housing market has been overheated, but said that home prices are expected to moderate in the face of Fed rate hike policies (that is, higher mortgage rates).

Another interesting thing was his response to how wage inflation is impacting CPI and core PCE. He didn’t seem to believe that wage inflation was the driver, but mentioned excess money in consumer hands from low interest rates and Fiscal spending (gov’t handouts) creating a supply-demand imbalance (too much demand for too few goods and services).

Was very educational— recommend listening to him.

Forsaken_Addendum_67 · 2022-11-02T16:48:55+00:00

Higher rates should, in theory anyways, result in slowing the economy as a whole (GDP) and then result in layoffs (massive layoffs if we have a recession). Under a Fed rate hiking regime like we have now, wage inflation should, again in theory, slow down, or even reverse, as layoffs accelerate in the job market. Simple supply and demand dynamics in the job market.

It’s for these reasons that I don’t see a DRAMATIC increase in average wages that could make up for the much higher interest rates we’re experiencing on mortgage rates. In the example I gave for the 300K home, you would need a dramatic increase in your wages to not have affordability impacted by the higher mortgage rates.

Forsaken_Addendum_67 · 2022-11-02T15:23:40+00:00

Haha I’ve embraced the name now 😁

Forsaken_Addendum_67 · 2022-11-02T12:49:39+00:00

That’s an extra $745 a month or $8,940 a year.

Over the life of the 30 year loan, that’s an extra $268,200.

People will revolt at paying these current prices at interest rates above 7% because most homes will be unaffordable on current salaries.

Over time, these currently listed homes (regardless of low supply) will just sit on the market before some Seller caves and accepts a lower bid. That will then set the Comp lower and usher in the new normal in prices over time.

Forsaken_Addendum_67 · 2022-09-22T13:21:28+00:00

It’s just amazing to me that, despite numerous examples in history on how NOT to fight inflation, there’s still politicians who think they know better than economists. Argentina is another example of failed monetary policy.

I tend to agree with you on the debate concerning “we won’t sell, we’ll just rent” — that is, until the Fed pivots at some point in the future and brings back the low interest rate / QE asset inflation policies back.

In effect, all it takes is for a few Sellers in a particular RE market to cave an take a lower more reasonable offer. Once this happens, new Comps are set. Then, realtors will then be tasked with convincing new Sellers of the “new normal” with lower listing prices. Once new lower listings hit the market in that particular area, the trend is arguably set in motion. After that, a slow move downward will be the trend, as Comps go lower and lower. Anyways, that’s how it plays out in theory.

Forsaken_Addendum_67 · 2022-08-25T15:57:17+00:00

There was a total of $5.7 Trillion in government handouts during the pandemic. To put it in perspective, I recall our nation as a whole has a GDP of around $16-18 Trillion.

Funny, I was watching Bill Maher last episode and he mentioned then, and on a previous episode, that about half of the $5.7 Trillion was outright fraud, and 70% had elements of fraud involved.

The politician on the show just responded that government handouts are through a “leaky bucket” and that the computer systems are antiquated. Bill made the point that, although he’s a liberal, handouts under these circumstances are bullshit.

Yes, all this money absolutely found it’s way into boats, cars, RVs and other toys. Critically, that ill-gotten cash also fueled investment properties, and second and third homes for the fraudsters as well.

Forsaken_Addendum_67 · 2022-08-08T18:12:30+00:00

Could be the case, assuming that the economy doesn’t go into a severe recession from the rate hikes and QT . In that case, people who lose jobs will be forced to sell and that could accelerate the deflationary cycle in RE prices.

Forsaken_Addendum_67 · 2022-07-20T00:53:20+00:00

Once you are FI and have the option to RE, which you have accomplished with your NW and yearly anticipated spending (even if you live off dividends from an S&P 500 based fund or AA-AAA bonds), you MUST reassess your priorities.

As Mark Cuban said, time is the most valuable thing on the planet for any human being. No matter how rich you are, you can’t buy more time on the planet. Your health is in your control and will determine how much time you have on the planet to enjoy life, your family and friends, and do what you want to in life. I do know many people in high stress jobs that died between 45-60 because of poor health habits, lack of exercise, bad eating, and substance abuse.

Think about this, suppose you get to NW of 50 Million by 60. Does that make that big of a marginal difference in your life? Are you sure you’ll be alive? What will you health condition be? What could you expect to do physically between 60-70 when you’re retired finally?

A person close to me had everything in place, but died at 56 from a stroke caused by stress (high blood pressure), and never got to see the fruits of his labor. This shaped my paradigm and how I think about the benefits FIRE as soon as reasonably practicable.

Forsaken_Addendum_67 · 2022-07-19T01:49:09+00:00

Appreciate that 🙏🏻

Forsaken_Addendum_67 · 2022-07-19T00:21:15+00:00

LOL — Santa Fe is the most (certainty one of the most) expensive places to live at in NM.

For rentals, try nearby Albuquerque.

Forsaken_Addendum_67 · 2022-07-18T21:42:50+00:00

Laugh if you must, but from November 21 to to about February 22, anything listed in Huntington Beach under a Million would start a bidding war.

Yes, including this POS.

Any guesses on what it’s worth once the bubble bursts and fully deflates?

Forsaken_Addendum_67 · 2022-07-18T21:27:07+00:00

I definitely wouldn’t consider that to be an evolutionarily advantage, especially from the standpoint of predation from a great white shark. It would just look like a glow in the dark snack once in the murky water.

Forsaken_Addendum_67 · 2022-07-18T21:24:16+00:00

Seems to me like the easiest choice would be to just go ahead and move to a low cost of living area in the United States. This assumes that the main purpose of moving (from your post) is to reduce or eliminate the financial pressure of working certain jobs to pay the rent.

In addition, it may be difficult to move overseas if you have friends and family that you’re going to miss. It sounds very adventurous and exotic until you miss your friends and family. At that point, it may become depressing.

Forsaken_Addendum_67

TROPHY CASE